Live, Love, Lime, Life
avoid the pitfalls of property rentals
Live. Life. Love. Lime
hello‌‌..
As a leading letting agent and Property Management company we get asked many times for help and advice when it comes to residential lettings. This maybe from an experienced landlord with a vast portfolio looking for current market values or from a house hunter who have found their new dream home but cant sell their own so decide to rent it. Whatever the advice we offer, it will always be honest and true to our knowledge, safe in the fact that we are not your typical property company but more your partner in the experience. The information on the next few pages is presented to answer some of those questions you may have or even highlight new legislation that may have come in and you missed as you lead your busy life. Please feel free to use and circulate to your friends, lets hope it may just help you when you least expect it!
P Green
Paul Green MNAEA
Live. Life. Love. Lime Where to start‌‌.. Can you actually let the property? Do you have lenders permission? Does your insurance company accept tenants? Lenders Permission. If your property is subject to a mortgage you will need to ensure your lender agrees to the property being let. Obviously Buy to Let mortgages allow this by design but if you intend to move out of your home and subsequently let it then you will need their permission. Freeholder Permission. If you are going to let out an apartment or a leasehold property, you need to ensure the head lease allows for sub letting? The management company in charge of collecting your service charges will be able to advise. Most modern buildings allow this without any issues.
Insurance.
Richard Twigger 01482 213215
rtwigger@insurance-partnership.com
Many Lenders will allow temporary permission on your existing mortgage if your change in circumstances is short term
If the property is freehold you should maintain buildings insurance on the property, most leasehold properties will be insured through your management company. You MUST inform your insurer you need landlord insurance with the ability for letting to tenants. There are many specific insurances available for letting your property such as rent guarantee, indemnity insurance, legal expenses cover etc. You should advise your tenants to take out their own contents insurance. Our office will gladly advise you on the various options.
Live. Life. Love. Lime Stay within the law…….. Are the gas appliances safe? Can a tenant get electrocuted? Do you have an EPC? Is there a smoke alarm? If you provide furniture, is it up to standard?
Gas Safety
The gas safety (installation and use) regulations 1998 require all gas appliances, flues and associated pipework to be maintained and in a safe condition at all times. You must have these tested annually by a qualified Gas Safe (previously corgi) engineer and the tenant must receive a copy of the certificate within 28 days of the check.
Electrical Safety
If a tenant is injured due to unsafe electrical appliances you could face a fine of £5000 or six months imprisonment (or both)
Whilst there are no specific legal requirements to have the electrical installation checked you do have a duty of care to ensure the property is safe because you are supplying ‘in the course of business’ The only way to demonstrate you have done this is to have the electrical services regularly inspected. Five year intervals are recommended.
Energy Performance certificate (EPC) You must provide a full EPC to any prospective tenants, this is the full EPC and not just the summary. This must be provided in any advertising material and cannot be advertised until an EPC is ordered. For failure to comply there is a fine of £200. Once you have an EPC it is valid for 10 years and must then be renewed. Look out for new legislation due soon regarding minimum standards for EPC values before a property can be let.
Live. Life. Love. Lime Stay within the law‌‌.. Are the gas appliances safe? Can a tenant get electrocuted? Do you have an EPC? Is there a smoke alarm? If you provide furniture, is it up to standard?
Fire Safety
As with Electrical testing there is no legal requirement to fit smoke alarms or co2 detectors in tenanted property but sometimes the law can hold you responsible if a fire caused injury or damage. You should always ensure your property is safe so fitting of smoke alarms and co2 detectors is highly recommended. Providing Fire blanket and fire extinguishers is also recommended in the kitchen.
Furniture Furnishing a property can range from only a few items to providing a range of appliances and furniture. Any soft furnishings supplied by you must meet the minimum standards under the Furniture and Furnishings (Fire)(Safety) regulations 1988 (amended 1989 and 1993). Ensure any furniture you supply meets these standards and has the label attached. All electrical appliances supplied by you need to be free from defects before letting. There are no specific guidelines or laws relating to this but as with Electrical safety you have a duty of care to ensure safety. An Annual PAT (Portable Appliance Test) with maintained records will ensure you are compliant. If a tenant is injured due to unsafe electrical appliances you could face a fine of ÂŁ5000 or six months imprisonment (or both)
Live. Life. Love. Lime Stay within the law……..
The Tenancy Deposit The Housing Act 2004 states that any landlord or agent who takes a deposit from a tenant for an assured shorthold tenancy must put it in an approved tenancy deposit protection scheme. Landlords or agents who fail to do this within 30 days of receiving the deposit can be fined up to three times the value of the deposit as a result of court action. They also cannot serve a Section 21 notice to end a tenancy and regain possession of the property until: • the deposit has been repaid; or • legal proceedings for failing to protect the deposit have ended. The Housing Act also states that: • the tenant must be told which tenancy deposit protection scheme their deposit is held in; • the deposit must be in money; • landlords who do not give the tenant the information they are required to under the law about • protecting their deposit will not be able to issue the tenant with a Section 21 notice; • the landlord or agent must give the deposit to the scheme operators when asked to do so; • each scheme must have procedures for resolving disputes without legal action (using ‘alternative • dispute resolution’), but the parties can go to court if they prefer. If there is no dispute, the deposit holder must return the undisputed deposit amount to the tenant within 10 days of being asked to repay it. The Act allows for deposits to be held in: • a custodial scheme – the money is held by an independent third party outside the landlord’s control; - DPS • an insurance-based scheme – the money is held by the landlord or their agent, provided they have suitable insurance arrangements. TDS or MyDeposits • Each tenancy deposit protection scheme has its own rules.
Live. Life. Love. Lime Ready to let…….. Now you have ensured you are legal and know what to provide, you need to find that all important tenant. “You only get one chance to make a good first impression” This has never been more important than when selling or letting a house, remember the first impression isn't necessarily the first viewing! The tenant will form an opinion of the property from the first time they see it, this could be any advert you place with any photographs. If you choose an agent to let your property, ensure their marketing and branding is up to a high standard to match your property. Clearly to ensure the first impression is good, the property needs to be well presented. The gardens need to be tidy and free of any rubbish, the house itself needs to clean and tidy – remove any clutter. I hear of many landlords who look down on tenants and don’t provide clean, tidy properties with good quality furnishings – these landlords are destined to fail, don’t be one of them!
Marketing
Did you know…. We offer a basic online only marketing package where you use our extensive advertising power but conduct your own viewings and checks
If you have outgoing tenants living in the property, incentivise them to keep the property tidy and allow viewings
Never underestimate the power of effective marketing when letting a property, check out the competition and be better than them. Many agents will do let only packages which are worth considering. Use the internet, its the single most important tool when marketing your property – some websites are better than others so do your research and advertise where the tenants will be looking!
Live. Life. Love. Lime Its let…….. Your chosen marketing has worked…. How do you know you have found a good tenant. The million dollar question….. They look ok, they talk a good story. - But will they pay the rent AND look after your property? - Sometimes its impossible to answer all of these questions up front but there are a number of things you can do to ensure you get the full picture. Sometimes its better not to accept the first tenant just because they want it!
Get References
TIP…. Never take anyone's word for it. Check and double check everything to avoid future pitfalls that WILL be expensive!
Guarantor
Obtain references from previous landlords, these should include general tenancy references plus rent payments being made. If possible go back two tenancies because their current landlord may want be evicting them so may tell you they are ok just to get them out! If they are employed (and you should seriously consider their ability to pay if they don’t have a job) get a company contact and get employment references including current contract length and salary If possible, get a character reference from a professional person who knows them. This is merely a back up but if someone of a professional nature is willing to put in writing that they know that person it may just help if things go wrong! Always ensure you carry out the necessary checks with credit reference agencies, this will ensure you have all of the relevant details and verifies the information given by the tenant and of course gives you the comfort that the tenant is credit worthy.
Some people have a history…. and people change, for this reason there may be some negative references. If you still wish to proceed with that tenant then ask for a guarantor and ensure you carry out the necessary references on them as you would with the tenant.
Live. Life. Love. Lime Its let…….. Your chosen marketing has worked…. You are happy with the tenant. Now for the paperwork…… Never allow a tenant into your property without first ensuring you have all of the legal paperwork in place.
The Tenancy Agreement
Not all tenancy agreements are legal, the internet is a great source of information but rely on it for legal paperwork at your peril. This is the bit you should seek advice on, get a solicitor or regulated letting agent to help you create the tenancy agreement for the type of tenancy you have agreed. You may wish to include some specific terms that are unique to this tenancy.
The Inventory
TIP…. Don’t sign the agreement until move in day – if you cant move them for any reason (a previous tenant not moving out) you may be liable for alternative accommodation.
Due to new deposit regulations, the inventory has never been so important. Many disputes between landlord and tenant end up with the landlord losing out because they cant prove the condition of the property at move in. Take photos, describe the condition accurately and get the tenant to sign it when they move in. Always put the meter readings on the inventory so you know who is liable for the utility bills. You may consider getting a third party specialist to carry out your inventory to avoid any pitfalls.
The Deposit
Collect and Protect within legal timeframe…. Always ensure you collect the security deposit of at least one months rent and protect it with your chosen method within the allocated time.
Live. Life. Love. Lime Move in day…….. You have prepared the documents, prepared the house, and arranged to meet the tenants there. Now for the move in. You may own the property, but from now on, its their home…. ensure you give them all of the information they need but be swift and professional about it. Sign the documents, collect the initial payments, formalise the future payment methods and show them how things work. Its usually easier and more reliable to collect rent by standing order so give the tenants your bank details with their paperwork, choose the date carefully to meet the tenants requirements and yours. Getting your rent as close to the tenants payday is always helpful but remember any shortfalls in rent if that date isn't the same as the tenancy start date.
The Utility Bills
From the day they move in, the tenants are responsible for the utilities. Take all meter readings on move in day and record them on the inventory. In addition to the actual reading make a note of the meter serial number which is unique to that property. This is especially important when taking readings in a block of apartments to avoid future confusion. Notify your utility suppliers of the change of circumstances and give them the closing readings. Also notify the council that you have let the property. TIP…. Many local authorities allow free council tax periods if a property is empty – contact yours to see if you qualify.
Live. Life. Love. Lime During the tenancy…….. Remember its their home now but there are steps you can take to ensure they are looking after your investment.
Try to get on with your tenants but don’t get too close.
Build a good relationship with your tenants, this will encourage them to respect your property Never intrude on them, they are now entitled to ‘quiet enjoyment’ of the property so never turn up unannounced. You must always give them 24 hours notice of any visits and remember that they must agree or you cant go in. (legally they cant withhold access unreasonably but its always better to have their agreement to enter) - don’t worry, there is an explanation of how you legally get access later if the relationship has broken down.
Let them make it a home.
Some tenants will want to put up pictures, maybe even decorate or change the locks for peace of mind that old tenants aren't able to access their home. Everyone's taste is different but we like to think a settled tenant will stay longer and look after your property as if it is their own. For this reason keep an open mind when a tenant asks to make changes to your house, just ensure you make any agreements in writing and agree that if you require them to, they put the property back to its original condition when they leave. TIP…. It’s a well known fact that a settled tenant who feels at home in their property will stay longer
Live. Life. Love. Lime During the tenancy…….. Remember its their home now but there are steps you can take to ensure they are looking after your investment.
Inspections
Carry out quarterly inspections, however great the tenants might seem. Apart from making sure that there are no major problems, it will help you see if anything minor needs fixing, like a dripping tap. If there is an on-going issue, such as excessive condensation you may want to visit more often until the problem has been resolved
Collecting the rent
TIP…. Take out a rent guarantee policy to cover the rent in any eventuality. Ask us for more details.
Arguably the most important part of the whole process. And also the single biggest cause of all landlord and tenant relationship breakdowns. Try to get the tenant to pay direct into your bank by standing order. Its always wise to time their rent payments to you with their salary payments. Many tenants will prefer this as it helps them budget. If the tenant hits problems always try to maintain a good relationship but at the same time be firm with them. This is your investment after all and they need to know that you aren't a pushover and the rent has to be paid.
Tax!
No-one likes this word but you must ensure you keep on the right side of the law. Take professional advice from an accountant to prevent any unwanted surprises from HMRC.
Andy Steele 01482 638401
www.360accountants.co.uk andy@360accountants.co.uk
Live. Life. Love. Lime Ending the tenancy…….. All good things must come to an end. Or in some cases you may want your property back? Use the following tips so you don’t drag this out any longer than you have to. Notices If your tenant is ready to leave they must give you one full months notice of their intentions from the date of their tenancy (the date they pay their rent). If you require possession you must give them two months notice.
When seeking possession, be sure to give the correct notice
If your tenants default before the fixed term has come to an end (e.g. non-payment of rent) you could serve notice under Section 8 of the Housing Act 1988. Or you could serve notice under Section 21(1)(b) to get your property back at the end of the fixed term. If the fixed term has expired and the tenancy has become periodic, serve notice under Section 21(4)(a). If you serve the wrong notice it will be invalid and you’ll have to start again, costing you time and money. …....again make 100% sure it is filled in properly, otherwise it may be declared invalid and you’ll have to start again. Give at least two clear months’ notice for S21 notices. The day on which the notice expires must be the last day of the tenancy period, i.e. the day before the rent is due. If in doubt – seek help from a professional.
TIP…. Always serve notice even if the tenants tell you they are leaving. If they delay or change their mind and you have new tenants lined up you can still gain possession.
Live. Life. Love. Lime Ending the tenancy‌‌.. All good things must come to an end. Or in some cases you may want your property back?
The checkout
Use your signed inventory to assist with the checkout, go through the property room by room and record everything against its condition when they moved in. Sign and date every page and get the tenants to do the same. Try to agree any deductions from their deposit at this time, if you cannot agree then you will need to refer to the deposit protection scheme you chose when taking their deposit. Get a forwarding address for them in case you need to pas son any post or contact them about their return deposit.
What is fair wear and tear?
You can’t claim for fair wear and tear. You need to allow for the original age, quality and condition of any item at commencement of the tenancy, the average useful life span to value ratio (depreciation) of the item, the reasonable expected usage of such an item, the number and type of occupants in the property, and the length of the tenants occupancy. You can claim for excessive wear and tear. You can also claim for rent arrears, the property not being cleaned, outstanding bills, failure to return keys, leaving before the end of a fixed term of a contract, and failing to give proper notice or agree surrender.
Live. Life. Love. Lime Self Management or Letting Agent?? Can you ‘do it yourself’ or will you need assistance? We hope this guide has helped you understand the fundamentals but you may still feel you would prefer your asset to be in the hands of eth professionals
DIY
You’ll need to live close to your rental property, enjoy dealing with people, feel comfortable dealing with the steps outlined in this booklet, have enough time, and have the necessary organisational and administrative skills to ensure you don’t make any costly mistakes.
Or Agent
If you are moving abroad or away from the area, are short of time, don’t want to keep yourself up to date on all the legislation, would rather maintain some separation from your tenants, or if you just want to make life easy, then you need to find yourself a reputable letting agent. REMEMBER: NOT ALL AGENTS ARE THE SAME A good agent can save you several times their fees, for example by minimising voids and reducing the risk of getting non-paying tenants. They can also negotiate higher rents, and deal with any repair/management issues for you. Balance the cost of agency fees against the cost of an empty property, non-paying tenants, and your own time if self-managing, before deciding. If you do choose an agent remember they are dealing with large amounts of YOUR MONEY. Protect yourself and ALWAYS make sure they are accredited, ask them if they have a code of conduct that they adhere to and they have clients money protection in place and a proper redress scheme should anything go wrong.
TIP…. Agents fees! Do your research…. Can an agent really do all they need to for just 7%. Unless you have a large portfolio these agents will normally have hidden charges and cost you more in the long run. Remember you are handing over a large asset so don’t cut corners.
Live. Life. Love. Lime A bit about us. Well done.... you have found your destination. As the regions fastest growing letting agent, Lime Property is part of a group of agencies that exceed expectations in everything we do. Our people, service and attitude to excellence is what we know is our biggest attribute. Hook this up with ground breaking technology, marketing expertise and simple drive to constantly be the best delivers a recipe for success. Others often copy us and we are proud of it!
The Pod St Andrews Quay Hull HU3 4SA
Live. Life. Love. Lime Reasons to consider us:
Live. Life. Love. Lime Reasons to consider us:
Live. Life. Love. Lime Reasons to consider us:
Live. Life. Love. Lime Reasons to consider us:
Live. Life. Love. Lime Reasons to consider us: